With Real Costs In Mind, Growing Colorado Cities Are Reevaluating Water Tap Fees

Jul 6, 2015

As cities in Colorado expand to accommodate a growing population, so are costs of providing services and utilities. Some communities, like Aurora, a city of 350,000 east of Denver, are reevaluating how they charge for services like water and how those costs might encourage smarter growth.

The complexities of a water bill basically have two components: The consumptive charge – which is the water you use – and the service charge. Typically the more water you use, the more you'll pay. What's less clear to customers is the service charge. That's often a fixed monthly fee that pays for things like pipes and treatment plants.

What consumers don't see is the tap fee. That's something that is paid long before they move into their home. A tap fee is a charge that is assessed to new developments, a new home or business in a community and it is a way for that new development to buy into that water system. Essentially it's a charge to hook up to the water system.

In 2014, Aurora significantly restructured their tap fees, said Marshall Brown, Director of Aurora Water.

"The intent of that was to tie the cost directly to the volume of water," he said.

Marshall Brown, Director of Aurora water says they hope the new tap fees will have developers think about what they're designing and its impact on water. "Instead of maybe just planting acres and acres of turf, they may now consider low water use plants of other types of more efficient water use landscaping."
Credit Maeve Conran / KGNU

Brown points out that under the old pricing structure a small house on a small lot might pay a tap fee of $24,500.

"Or you could have a 2 acre parcel with a 10 bedroom, 6 bath structure and that would also have paid a $24,500 tap fee," Brown said.

Now large water users will pay larger tap fees and smaller users will pay smaller ones. Brown said the idea in restructuring the tap fees was not to guide specific development but rather to have developers think about what they're designing and its impact on water.

"Instead of maybe just planting acres and acres of turf, they may now consider low water use plants of other types of more efficient water use landscaping," he said.

Chuck Howe, Professor Emeritus of Economics at CU Boulder said growing cities can also use tap fees to encourage smarter and denser development.

"If you have scattered development, go down south of Denver and see the little subdivisions here and there, that makes it very expensive to bring water service to those areas," Howe said. "You have to lay a lot of supply pipes and sewer pipes long distances to serve only a few customers."

Amelia Nuding, a water and energy analyst with Western Resource Advocates is looking at how some communities are rethinking their tap fees with a view to encouraging more water wise development. Along with Aurora, Nuding is looking at five communities around the country – that study is due out later in summer 2015.

She said some cities are already considering the location of new development in the upfront costs they charge to developers.

"There are several tap fees that will charge more if these developments have taken place outside the traditional city limits or outside the traditional water service area, just because it costs more to build that infrastructure further out," Nuding said.

For Aurora Water, it's too early to say what impact their new tap fees are having on development, but Executive Director Marshall Brown said now developers have a clearer sense of the real cost of water.

This story comes from 'Connecting the Drops' - a collaboration between Rocky Mountain Community Radio and the Colorado Foundation for Water Education. Find out more at cfwe.org.